GE Begins Exit of Federal Aid Program

General Electric ( GE) on Wednesday said it will no longer issue short-term debt backed by the federal government, positioning itself to exit a program which was a key source of aid in the financial downturn.

GE Capital, the conglomerate's finance unit, will no longer issue commercial paper with maturities of 31 to 270 days backed by the Federal Deposit Insurance Corp. The company will continue to have the ability to access up to $14 billion in long-term debt through the Temporary Liquidity Guarantee Program, the name of the program created to stir credit markets last fall.

Liquidity and funding positions for GE Capital have "improved significantly during the past 10 months and remain strong," GE said. The FDIC considered several factors in allowing GE to exit the program, including the financial condition of GE Capital, its capital, management and the risk presented to the government, GE said.

"This move is a positive step in returning the broader capital markets to normal functioning and is in line with GE Capital's 2009 and 2010 debt issuance and funding cost plans," said GE Senior Vice President and Treasurer Kathryn Cassidy. "It also allows us to respond to strong investor demand for GECC longer-dated non-guaranteed commercial paper."